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Developer Irongate has set its sites on a lofty new expansion: The company is converting the penthouse floors in the Diamond Head Tower of the Ritz-Carlton Residences, Waikiki Beach, into an exclusive “fractional-ownership club.”
Irongate announced plans to sell 84 shares in its new Diamond Head Club at a party Tuesday night to celebrate the fall opening of its most recent tower, which added another 245 ocean-view residences to Ritz-Carlton’s Waikiki offerings. Combined with the ‘Ewa Tower, the 552-unit project is the largest Ritz-Carlton Residences in the world.
But that distinction wasn’t enough for Irongate Chairman and CEO Jason Grosfeld, who has found a way to add even more exclusivity to one of the state’s highest-end projects. The private club will consist of six penthouses perched on the 37th and 38th floors of the 350-foot Diamond Head Tower. The two- to four-bedroom penthouses, ranging from 2,100 to 4,125 square feet, come with exclusive use of a 5,400-square-foot rooftop lanai with a 270-degree ocean and mountain view that stretches from Diamond Head to Barbers Point. They also have access to their own club concierge team and all Ritz-Carlton amenities.
Grosfeld said the club’s interior also will surpass any of the company’s projects to date, which in Hawaii also includes the Trump International Hotel Waikiki.
“It will blow people away,” Grosfeld said.
Grosfeld is referring to the project’s aesthetics, not its price point. Diamond Head Club owners will have a fee-simple interest in a portion of the penthouse, which is a fraction of what it would cost to buy the whole property.
Penthouses sold for $7 million to $20 million for the ‘Ewa Tower, which opened in July 2016, said Sarah Evans, Irongate’s managing director of marketing and sales opportunities.
But fractional ownership in the club’s flexible ownership program will start at $700,000 for four weeks spread over the summer and winter, Evans said. There will also be a fixed ownership program that allows owners to come annually during the same peak two-week period, including Christmas and New Year’s, Golden Week and Obon, she said.
Unlike timeshares, which offers buyers a right to use a property during specific times, fractional ownership is a real estate transaction that comes with a fee- simple deed giving buyers partial equity in the property. Fractional ownership buyers typically have longer annual access to a property than in a timeshare. They also can realize capital gains.
Joseph Toy, president and CEO of Hospitality Advisors LLC, expects the market to quickly absorb the club units.
“There’s definitely a market for high-end fractionals, and I expect demand will be elevated because this product is in Waikiki and is backed by the service and amenities of the Ritz-Carlton brand,” Toy said.
Mark Bratton, senior vice president of Colliers International, said developers, especially on the high end, are more bullish than ever about Waikiki. The trick, however, is finding available space to develop or redevelop.
“Most of our stuff was built in the late 1960s and 1970s,” Bratton said. “We’re also constrained by the Ala Wai Canal. If we cleaned it up and made it more approachable, it could become new waterfront, and we’d see more luxury properties on that end, too.”
Grosfeld said the beauty of the club is that it allows Irongate to deliver more luxury development to Waikiki, where construction costs, limited availability of land and lengthy entitlements have created barriers to entry.
“As you can see from the company’s investment in Waikiki over the last 16 years, we are believers, and we certainly would like to do more in Waikiki,” he said.
Grosfeld said Diamond Head Club allows Irongate to reach a whole new market while providing greater choice for buyers. Evans said hotel condominiums on the other floors of the Diamond Head Tower began selling in the summer of 2014 and were largely sold out by mid-2016.
Grosfeld said the new concept is predicated on the belief that there also “are a lot of people, who for about the same amount of money, would rather have a two-, three- or four-bedroom penthouse and are completely fine with just using it for a few weeks or few months of the year.”
Clarification:
This story has been updated to include a comparison of fractional ownership and traditional timeshares.
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